From renewable energy to resources and waste: 10 green policy priorities for the UK’s new Labour Government

Image: Labour Party. Pictured: Starmer's first Cabinet meeting after the 2024 general election

Starmer’s Labour Party stormed to success in last week’s general election, securing more than 400 MPs.

The new government is now tasked with improving public services and reviving the UK’s economy after Brexit and Covid-19. Its vision for doing so entails making the nation a low-carbon energy superpower and supporting greener manufacturing and industry.

Providing clear, long-term policy certainty to businesses the coming months will be key vital. Four changes in Prime Minister in two years have left businesses struggling to engage with policymakers and plan ahead for a more sustainable future – at an important junction for doing so.

Here, edie lists ten green policy priorities where the new UK Government should show ambition and set the direction of travel for the private sector.

This is the second half of a two-part feature. The second half, with five additional green policy priorities, can be found here.

1) Making the Net-Zero Strategy lawful

A key green policy priority for the Labour Government is to formulate a lawful net-zero strategy, for the delivery of its legally-binding target of net-zero emissions by 2050. The target was set in 2019 under an update to the Climate Change Act.

The previous Conservative Government’s strategy to deliver the target has been declared ‘unlawful’ twice by the High Court due an overreliance on ‘controversial’ technologies, vague targets and a lack of promised funding.

The High Court has mandated the Government to revise its approach and publish a lawful decarbonisation plan, with sector-specific pathways. The Labour Government has until May 2025 to develop this plan.

The UK Government’s climate watchdog, the Climate Change Committee (CCC), is expected to publish its first set of recommendations for the new Government this month on enhancing net-zero policies.

While the Labour Party’s manifesto makes no explicit mention of how it plans to make the net-zero strategy lawful, it has been indicated that the Government will create an ‘office for net-zero delivery’ as a priority, to better join up work in different departments. This was first recommended in Chris Skidmore’s Net-Zero Review.

Additionally, the Labour Party has promised to move the ban on new petrol and diesel car and van sales back to 2030, after Rishi Sunak which pushed it back to 2035 last year. Other net-zero policy plans include reinstating a requirement for private rented properties to meet EPC C or higher, but delaying the requirement from 2028 to 2030.

According to a recent report spearheaded by Skidmore, if the Government fails to urgently provide a long-term certainty and a clear roadmap for net-zero, it could forfeit up to £115bn in energy company investments to nations with more supportive policy landscapes.

2) Getting Great British Energy up and running with clear strategic aims – and a budget

Labour is aiming to deliver a decarbonised British electricity grid by 2030 – five years sooner than the Conservatives. Achieving this will be no mean feat, with unprecedented action required to unlock planning bottlenecks, build out new forms of flexibility and attract private investment.

Starmer has pledged, as a first step, to get Great British Energy up and running “within months”. It will be a publicly-owned investment entity, located out of Scotland and serving all of the UK. It will co-invest in new energy generation projects.

Beyond a commitment to back a mix of renewables and nuclear, with a focus on community renewables, details are lacking on its strategic remit. How will it identify projects which would be unviable without Government investment? Will it support mature technologies or more innovative options? And is the focus entirely generation – or will storage and grids get funding?

The entity is also lacking an initial budget commitment at present. Hopefully, more details will come once GB Energy is operational.

We can also expect more information in the coming weeks and months on Labour’s plans to reform planning and permitting for energy infrastructure, large and small. This will build on changes already made this week to unlock onshore wind farm planning following David Cameron’s de facto ban.

3) Planning a just transition for oil and gas workers

As renewables and nuclear scale up, and energy efficiency improves, fossil fuels will reduce. Labour has stated that it will honour all existing licences for additional North Sea oil and gas exploration and extraction, but put an end to future licencing rounds. Production is already declining due to the depletion of reserves.

Sunak conversely attempted to push forward legislation to mandate annual licencing rounds, but this did not pass before the general election was called. If this bill returns, it will now likely be blocked.

Climate advisors domestically had cautioned against Sunak’s bullish approach, urging a ‘presumption against’ new licencing. And on a global basis, the International Energy Agency’s 2050 net-zero transition roadmap stipulates that no new upstream oil and gas projects with long lead times should be approved.

Energy businesses operating in the North Sea, as well as trade unions and local authorities, are seeking details on how Labour is planning for a just and orderly wind-down for workers and investors in Scotland’s oil and gas sector. While the climate imperative is understood, communities want assurances that there won’t be disorderly change like coal mine closures under Margaret Thatcher.

Upskilling and reskilling plans will need to be watertight. Labour did not include an overarching skills strategy in its manifesto. This has not been updated since before the 2050 net-zero target was enshrined in law five years ago.

Labour is planning to continue the windfall tax on oil and gas profits to the end of the next Parliament, as the Conservatives would have. It wants to increase the rate from 35% to 38% and re-assess a tax break package which currently lets firms claim back 90% of CAPEX on exploration and expansion projects. The tax was implemented in light of record high profits amid the price crisis.

4) Unlocking green finance from the private sector

Another top priority for Labour is to build on the green finance strategy with a green taxonomy, as well as mandate corporate transition plan disclosures.

A green taxonomy is expected to deliver a standardised approach to classifying investments as sustainable or not. The Green Technical Advisory Group (GTAG) issued its final advice on the creation of a UK Green Taxonomy to the Conservative Government last year. Now, it is upon the latest Labour Government to deliver a final consultation on the long overdue taxonomy.

Earlier this year, a report revealed that approximately £50-60bn will be required post-2030 to achieve the UK’s legally binding climate commitments. Much of this finance will need to come from private sources, especially due to high national debt post-Covid-19.

However, in 2021, green finance accounted for only 6-7% of all capital markets activity in the UK, underscoring the importance of the taxonomy to help unlock crucial green private finance.

Some of this money will come from corporates. Labour wants to mandate UK-regulated financial institutions and FTSE 100 firms to develop and implement credible transition plans for reaching net-zero, including green investment.

In 2022, the Tory Government launched the Transition Plan Taskforce, to ensure large businesses in high-emission sectors start disclosing the necessary data. While the reporting against the Taskforce’s standards currently follows a voluntary ‘comply or explain’ regime, Labour has promised mandatory disclosures.

Additionally, while the industry has previously called on the UK Government to make the Taskforce on Nature-related Financial Disclosures (TNFD) disclosure requirements mandatory, the Labour Government has not stated any intentions to do so.

On the question of clarifying interoperability with the International Sustainability Standards Board’s (ISSB) standards, the Tory Government introduced a new Committee before the general election to oversee UK’s adoption of ISSB standards. Now, it remains to be seen whether Labour will retain this Committee or disband it.

5) Publishing a modern green industrial strategy, backed with £7.3bn of public money

Sunak’s government had been accused of approaching industrial transitions in a ‘piecemeal’ manner. In the absence of an overarching strategy, Ministers have signed one-off funding deals like those with Tata Group for its Port Talbot steel mill and electric vehicle battery gigafactory in Somerset.

There have also been industry-wide funding competitions such as the Industrial Energy Transformation Fund and general support packages amid Covid-19 and the energy cost crisis.

Labour has pledged to bring forward a modern, comprehensive industrial strategy, addressing looming skills gaps, the net-zero transition and the imperative to remain internationally competitive in one package. This should form a key part of Chancellor Rachel Reeves’ vision to revive the economy.

For now, we know that Labour wants to allocate £7.3bn this Parliament to key industries. For every £1 of public investment, Ministers expect to unlock £3 of private investment.

Steelmaking would take a £2.5bn share; £1.5bn would be allocated to Gigafactories producing electric vehicle batteries; £1.8bn would go to decarbonising ports; £1bn would be set aside for carbon capture and £500m is earmarked for green hydrogen.

Labour has promised to end short funding cycles to key R&D bodies such as Innovate UK in favour of ten-year budgets. It has not indicated an intention to compete with the huge subsidy packages for green industry on offer in the EU, USA and China.

The new Government will be responsible for overseeing the ongoing reform of the UK’s Emissions Trading Scheme (ETS), which uses a cap and trade mechanism, in line with net-zero by 2050. Far fewer allowances will be offered in the coming years, forcing businesses to decarbonise. The ETS is also set to be reformed to cover additional sectors such as energy-from-waste.

This is the second half of a two-part feature. The second half, with five additional green policy priorities, can be found here.

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